German Solar Subsidies at Stake as Ministers Clash Over Cuts

By Stefan Nicola -
Jan 25, 2012

Germany’s solar subsidy program, the
subject of dispute between two ministers in Chancellor Angela Merkel’s Cabinet, will take shape today as lawmakers debate
support for developers in Europe’s biggest renewables market.

Economy Minister Philipp Roesler, who heads the Free
Democratic Party junior coalition partner, proposes overhauling
clean-energy support by capping new solar installations to curb
costs. Environment Minister Norbert Roettgen, of Merkel’s
Christian Democrats, is seeking to increase the frequency of
subsidy cuts and has in the past opposed a fixed limit.

The positions will be tested at a meeting of coalition
lawmakers in Berlin at 3 p.m. local time. They underscore
tensions inside Merkel’s government over support for renewable
energy, which provides a fifth of Germany’s electricity.

Subsidy cuts would threaten German solar companies such as
Q-Cells SE (QCE) and Conergy AG (CGYK), which are already struggling with
rising competition from China where the world’s three largest
panel makers are based. Reducing support also may undermine the
government’s efforts to develop more low-carbon power sources to
replace nuclear stations that Merkel plans to close by 2022.

Bring to Standstill

Introducing an installation cap or abolishing the law on
renewables would “bring to a standstill the switch to clean-
energy sources,” the BEE renewable-energy lobby and its allies
from consumer and environment groups said in a letter to the
chancellor on Jan. 20.

A cap would mean “photovoltaic is dead in Germany,” said
Franz Fehrenbach, chief executive officer of Robert Bosch GmbH,
the German car-parts supplier that’s pursuing a 1.5 billion-euro
($1.9 billion) push into solar energy, according to Reuters.

A draft bill dated Jan. 12 and sent by Roesler’s ministry
to coalition lawmakers proposes to limit solar-panel
installations to about 1 gigawatt a year on average through
2020. Germany added a record 7.5 gigawatts of panels in 2011,
more than double the government’s target.

Solar power “is the biggest cost-driver in the system,”
the ministry said in a letter detailing the plan obtained by
Bloomberg News. “There is urgent pressure to act.”

That runs counter to proposals being touted by Roettgen,
who is responsible for renewable-energy law in Germany and has
the final say on the policy before it goes to Cabinet.

Regular Rate Cuts

The environment minister has rejected Roesler’s demands for
an installation cap and proposed instead more regular cuts to
subsidies. Roettgen told solar industry representatives last
week he wanted to reduce the feed-in tariff, a premium rate for
renewable power, monthly instead of twice a year.